Document Type
Journal Article
Publication Title
Journal of Applied Economics
Volume
27
Issue
1
Publisher
Taylor & Francis
School
School of Business and Law
RAS ID
62454
Abstract
There is a growing consensus on the translation of monetary policy actions into changes in credit demand on account of changes in interest rates. The study investigates monetary policy, macroprudential policy, bank-specific and macroeconomic determinants of bank risk-taking from 2010–2022 in Indonesia. The study aims to address a gap in the literature because most previous studies have focused on advanced markets. First, three POLS and fixed effect models are estimated. However, the Durbin Wu-Hausman test indicated endogeneity issues with the estimated models. The second stage uses a system GMM estimation to investigate the impact of central bank rates and macroprudential policy on bank risk-taking. Dynamic-GMM estimations find that, partially the central bank rate and macroprudential policy have a positive impact on bank Z-Score. Furthermore, when central bank rate and macroprudential policy are included in a model, we still find a positive impact of both policies on bank Z-Score.
DOI
10.1080/15140326.2023.2295732
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial 4.0 License
Comments
Anwar, C. J., Okot, N., Suhendra, I., Indriyani, D., & Jie, F. (2023). Monetary policy, macroprudential policy, and bank risk-taking behaviour in the Indonesian banking industry. Journal of Applied Economics, 27(1), article 2295732. https://doi.org/10.1080/15140326.2023.2295732